China Rejects VW’s Use of SEAT Brand for EVs

Chinese regulators have refused Volkswagen AG’s request to use its SEAT brand for a new line of locally produced electric cars.

The cars are to be built by VW’s 5.1 billion-yuan ($765 million) EV venture with Chinese carmaker JAC (Anhui Jianghuai Automobile Co.). The partnership was announced nearly a year ago and was approved in May.

Chinese officials don’t object to the venture making EVs. But sources tell the Financial Times that the ruling apparently signals a limit to the government’s tolerance of foreign carmakers that wish to leverage one of their international brands to tout an entirely new line of vehicles in China.

The new policy applies only to the new VW venture, according to FT. The newspaper says the ruling does not appear to prohibit VW from using its brands in future product programs with its other two joint ventures in China. Likewise, carmakers such as Audi and BMW that already make self-branded “new energy” vehicles in China may continue to do so.

Some observers interpret the decision as a way to help domestic manufacturers—which have struggled to compete in China’s mainstream car market against the power of well-established foreign brands—have better luck in the country’s emerging EV market.